Darrell Stanford on Lease Relations

A little more than a year ago the Plenum of the Supreme Arbitration Court of Russia published a decision which created new opportunities for framing lease relations. In the decision it was suggested that only one agreement format be used instead of the prevalent formats of the preliminary, short-term and long-term lease agreements.

Summing up the first results since the publication of the court decision, the majority of observers continue to call the Russian market a developing market, and examples of the application of the decision remain rare. Darrell Stanaford, Deputy General Director for Strategic Development at RD Management, shared his views of the situation with the magazine CRE.

According to the expert, the preliminary lease agreement is a rather weak instrument, as one party to the agreement can get out of its obligations rather easily.

Stanaford names the main reasons for disagreements between tenants and landlords: “Firstly, this is a lack of a partnership approach to relations and, secondly, a lack of understanding of the priorities of the other party, and thirdly, the tax increase on commercial real estate.” The market has not become more civilized with arrival of the “tenant’s market,” the expert admits.

What pitfalls are preventing the popularization of the decision of the Plenum of the Supreme Arbitration Court? What needs to be done to optimize the process of signing a lease agreement? More information and commentary on these issues can be found in the latest issue of CRE.